Expert Financial Advice Blog

Handling Debt during Divorce: Share the new Value

In the case of a home that has increased in value since the couple bought it, refinancing also solves the problem of how to compensate both spouses for that jump in value. Here’s how it would work. Let’s say that the couple bought the home for $100,000 and it is now worth $200,000. By refinancing, the spouse who is keeping the house could take out a larger mortgage and give the other spouse some of the proceeds, based on their agreement in the divorce settlement. In our example, the spouse retaining possession might take out a $50,000 loan and give it to the other spouse as his or her half of the increase in value. If you want to use this approach, it’s important to consider whether the spouse who is keeping the home can qualify for and make payments on a larger mortgage.

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Members of the Dallas-Fort Worth Financial Planning Association answer your financial questions. The Texas Society of CPAs is also posting personal finance tips.